More companies in the greater China region are outsourcing their logistics operations, although using another firm to manage the movement of goods is taking hold only slowly.

E-Commerce Logistics (ECL) founder and chairman Simon Hsu Nai-cheng said most small or medium-sized Hong Kong enterprises were wary about outsourcing a key part of their operations to a stranger.

Set up in 1999, ECL provides warehousing, order processing, re-packaging, transport and logistics services integrated with an information technology system that allows real-time checking of inventory and tracing stocks.

Mr Hsu said that company was a pioneer in what was a new and difficult business.

"We lost a lot of money building the business up from scratch and are still making great efforts to educate companies about the emerging industry," he said.

International firms had become more open to the concept of third-party logistics in the past two years.

However, many customers started by only outsourcing a small part of their logistics operation to ECL.

"We came a long way to get our first customer, which was an HK$8,000 contract, compared with a HK$1 million contract for our biggest customer now. At one point, we were losing HK$3 million a month," Mr Hsu said.

He said the firm would break even in the second quarter of the year.

The company recently signed up UPS Logistics of the United States as an anchor tenant of its 200,000 square foot logistics centre in Taipei.

Mr Hsu said ECL was setting up a logistics network in the mainland. A 100,000 sq. ft. logistics centre in Shanghai opened this month.

ECL was at the final stage of negotiations to form a venture with a mainland distributor which would give it a presence in six major cities.